Glen Innes and Deepwater went onto Level Four water restrictions a month ago - but, mayor Carol Sparks said, not everybody is conserving water.
"There are people out there who aren't really aware of the critical nature of our water," she said. "Our water situation is quite dire."
The Beardy Waters pond is at limited capacity, while Eerendii Ponds at 40 per cent.
The mayor encouraged the public to be very careful about their water use.
"We need to keep the town water supply happening. If we can't, we'll have to ship it in - but we're not at that stage yet."
Level four restrictions mean gardens can't be watered except with bore water and grey water; vehicles can only be washed manually, except for special circumstances; swimming pools can't be filled; outdoor surfaces can't be washed. (For more information, visit https://www.gisc.nsw.gov.au/infrastructure/water-services.)
Council, Cr Sparks said, also needed to look at putting in another water bore.
She believes council should provide incentives for residents, including town dwellers, to get tanks on their houses.
Council would also look at greywater use, the mayor said. Council already has a small dam at the sewage works, which the firefighters have used for fighting fires. Cr Sparks thinks council should use that water for parks and gardens, rather than potable water.
"The drought is an ongoing problem for everybody, and we all have to face the fact that climate change is here," Cr Sparks said. "We have to work with what we've got to the best of our abilities."